CONGRESS TARGETS ABUSE OF "AUTHORIZED GENERICS"

Published Online: Friday, September 1, 2006

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Congress is considering new legislation
to outlaw the marketing of
"authorized generics" during the 180-day exclusivity period of generic pharmaceutical
patent challenges. Generic
drug industry leaders say that this
move is necessary to restore the pharmaceutical
market balance created by
the Hatch-Waxman Act of 1984. That
law created the 180-day exclusivity
period as an incentive to encourage
generic companies to challenge questionable
or frivolous brand pharmaceutical
patents as part of the complex,
intellectual property-based US generic
drug approval process.

When a drug patent holder repackages
its own branded drug and markets it
through a subsidiary or third party as an
authorized generic during the 180-day
period of exclusivity, the incentives
designed to produce generic competition
are reduced or eliminated, industry officials
contend.

A bill to curb this practice was introduced
in the House by Rep Jo Ann
Emerson (R, Mo). It is a companion to similar
Senate legislation sponsored by Sen
John D. Rockefeller IV (D,WVa).

The House proposal drew immediate
support from officials at the Generic
Pharmaceutical Association (GPhA). They
said that the restrictions on authorized
generics would "eliminate a tactic that has
been utilized extensively by the brand
pharmaceutical industry over the past 3
years, to the detriment of consumers."

GPhA President and Chief Executive
Officer Kathleen Jaeger said that "authorized
generics have upset the balance of
the Hatch-Waxman Act by discouraging
investment in generic patent challenges
that have previously delivered billions of
dollars in savings to American consumers."
At the same time, this strategy
tends to "reward the brand companies
for undermining the Hatch-Waxman system,"
she said.

A new independent analysis of authorized
generics released by GPhA concludes
that the practice of introducing authorized
generics could "significantly reduce incentives
for independent generic firms to
challenge invalid brand name patents and
to develop noninfringing processes." The
study also found that the continued introduction
of authorized generics "will lead
generic firms to be less aggressive in competing
against brand name firms, and the
ultimate losers will be consumers."